What is DeVry’s business worth?
Stock is down almost 10%. The fundamentals of this company hasn’t changed, other than it’s suddenly out of style. Given the company’s successful growth in the medical/healthcare and professional/training segments, and the furor surrounding the student lending industry, this provides a baseline on which a low/high end valuation can be formed. In order to conduct the cash flow analysis for the next 10 years, I set the discount rate at %11.75 to determine the value of all future cash flows for DeVry. I feel that this rate is justified given some of the risks surrounding the lending industry in the near term, even in light of DeVry’s assertions that they will not be materially affected. For the best case scenario, revenue growth rates is set at 20% for the next 5 years, trailing off to 5% for each year thereafter. This assumes DeVry optimizes it operations through continued real-estate sales and targeted capital expenditures and investments to realize continued growth in their medical/heal
